Forum Archive Index - June 2000

["vincent.wang" <vincent.wang@xtra.co.nz>]

Warner,

 

I don't think RCH would become a takeover target because its business is too much diversified.  Its business includes leather, aquarium, construction, and venison.

 

In 1999, RCH achieved a 12% growth on sales and its NAT has shown improvement from -29 millions in 1998 to -3.8 millions.  The share price at 44 cents might look cheap against its NTA of $1.18, but it is quite difficult to foresee the future of this company, mainly because its business is so widely spread over.

 

 The biggest problem of RCH lies with its leather investment in China, its largest investment in China.  the leather operation has not generated any profit yet.  And the worst is Mr. Ernst Hagen, the Executive Director responsible for the leather operation has resigned subsequent to balance date, this might imply that the leather operation has more troubles to come.  

 

In my view, RCH needs to streamline its operation before it regains investors' confidence.  The small aquarium operation, Blue Zoo, which only generated 7 millions dollars sales, should be divested, because it does not fit into its other business.

 

It is not impossible that one of RCH's business to be taken over by some other company, but in my view, it is quite impossible for a company to buy such a diversified company.

 

RGDS,

 

Vincent Wang